Home-Builder Confidence Hits Five-Year High

U.S. home builders’ sentiment increased in June to the highest level in more than five years, the latest in a series of encouraging signs for the housing market.

The National Association of Home Builders said Monday its housing market index was 29 this month, up a point from a month earlier and the highest level since May 2007. May’s reading was revised downward by a point to 28.

The uptick “is reflective of the continued, gradual improvement we are seeing in many individual housing markets as more buyers decide to take advantage of today’s low prices and interest rates,” said Barry Rutenberg, the trade group’s chairman and a home builder from Gainesville, Fla.

The results were above expectations. Economists polled by Dow Jones Newswires had forecast a reading of 28.

The group’s chief economist, David Crowe, noted that home building still faces numerous challenges as the industry gradually climbs back from an historic bust. “Builders across the country continue to report that overly tight lending conditions and inaccurate appraisals are major obstacles to completing sales at this time,” he said.

A reading above 50 in the NAHB index would mean that more builders view conditions as good rather than poor. The gauge hasn’t been in positive territory since April 2006. At the height of the building bubble, readings were in the high 60s and low 70s.

One out of three components of the index — current sales conditions — increased in June, rising by two points. Traffic from potential buyers and builders’ expectations for sales over the next six months were both unchanged.

The index was based on a survey of 337 builders. Regionally, the index grew by five points in the Midwest and four points in the West. It fell by three points in the Northeast and two points in the South.

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